Betting and Belief: Prediction Markets and Attribution of Climate Change

John J. Nay, Martin Van der Linden, Jonathan Gilligan

April 5, 2016

Prediction Markets

Climate Change and Prediction Markets

Prediction Market Simulation

Two Alternate Realities

Social Network

Model

  1. Trader agents estimate forecasting model with data.
  2. Make predictions for climate for 6 yrs from now to assign expected value to temp securities.
  3. Trade on market.
  4. Payoffs for owners of security that was correct.
  5. Decide whether to adopt neighbors model based on cumulative earnings.

Parameters

Convergence Over Time

Sensitivity Analysis Design

Sensitivity Analysis Results

References